Pension Fund Transparency Update

Last week, the MBTA reached agreement with its largest union, Local 589, on a new collective bargaining agreement which includes commitments to increase transparency of the union’s pension fund.

The agreement includes two components related to transparency:

  • It requires monthly transfer of data about pensioners from the pension fund to the MBTA. The agreement itself permits but does not require the MBTA to disclose this data. The MBTA is already covered by public records laws and required additionally to post pensioner data to the state’s Open Checkbook system (as a result of language we passed earlier this year).
  • It commits the pension fund to produce an annual report meeting the Government Finance Officer’s Association standards for pension fund transparency. This is a big step forward as those standards require the creation of audited schedules of information which will make the status of the pension fund clearer.

Both of these measures had been expected since April to be part of the agreement — they reflect our efforts earlier this year to reach a settlement on the MBTA’s pension fund transparency.  But it is great to see the change finally set in stone. This is real progress and I commend the MBTA, the union’s leadership and the fund itself for these major steps towards transparency.

The issue is not completely settled. The Boston Globe has sued the pension fund, arguing that it should be subject to the same openness rules as a public entity — required to hold open meetings and to respond to newspaper requests for documents. I understand the Globe’s interest in this — I am always for more openness — and I used to see this case in the same way, in fact passing legislation on that premise.

After a lot of debate, I have accepted a different legal conclusion as to the legal nature of the union’s pension fund: Because of federal laws about public transportation unions going back to the 1940s, the fund is a private entity and we don’t have the power to impose rules on it as if it were a public entity. Ultimately, that is a call for the courts. It will be interesting to see how the courts analyze it. (Of course, the MBTA itself is a public entity, subject to open meeting laws. But the union’s pension fund, unlike other public pension funds in the state, is legally separate and in a different category.)

I believe that by meeting the GFOA standards, the fund is actually doing much more to create transparency than public records law requires — it is creating audited documents and schedules that would not otherwise exist in consolidated form. By adopting those new standards, which speak to fund administration, and by getting the pension details into the Open Checkbook system, so that everyone will know who is getting pensions and how much, we have certainly made the fund much more transparent.

One further area that I do agree could be more transparent is the compensation of the top executives of the fund — I have been unable to determine that that type of disclosure — routine in non-profit organizations — is mandated by the GFOA standards. I hope the fund will choose to make that disclosure voluntarily.

Components of the agreement:

Published by Will Brownsberger

Will Brownsberger is State Senator from the Second Suffolk and Middlesex District.

5 replies on “Pension Fund Transparency Update”

  1. As I have written before, it is not very useful to know if employee x is getting a pension of $18,000 or $28,000 or $38,000. There is no way to evaluate whether the amount is fair or not (i.e., fair for tax payers and fare payers). What is important to know is the basis for determining pension amounts and when they are paid. Exactly how early can an MBTA employee retire? What is the definition of “compensation” used to determine the pension? What is the pension formula? Details like that. One Globe article recently provided an example of an executive apparently receiving a full pension at an absurdly early age (age 46 I think). The cost of this is huge. And while the plan may be sheltered from full transparency by some old law, the public has a right to know, since we are paying the fares and the taxes that support these pensions.

  2. Finally a breath of transparency has swept into the finantial/pension system. Now we need transparency in the service plan implementation process. It seems they give a lot of lip service but end up regressing to their old ways in setting up the route plans.

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